easy · Volume Spread Analysis effort-vs-result-spread
A trader sees an up-bar closing on its low on high volume and assumes it is a 'breakout' because the volume is high.
What is the fundamental error in this reasoning?
- Mistaking a narrow spread for a clear, obvious sign of market-maker indecision.
- Assuming the close position matters far less than the simple open-to-close direction of price.
- Ignoring the plain fact that valid breakouts must always occur strictly on low, quiet volume to count.
- Failing to recognize that high volume on an up-move often contains professional distribution.
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